What makes a Good Trader Good?

Good Traders

Trading is a discipline that requires a lot more than what I can write in one article. However, it is important for you and I to nail down what we lack and to figure what else we need before we get there, which is in line with the theme of continuous development. Right?

You see, we all want to become successful and we all want to be profitable. Yet, everyone has a different journey. This becomes a tricky subject also because every one defines success differently and there is no right or wrong answer to any of them. For me (as I write this post), I am looking to set up a Fund. While some of you may be looking for more profit, others are looking for consistency, and, some, to just achieve a net positive P&L at the end of the month. The truth is, only you know what you are looking for and only you know what success truly means to you.

When I meet with successful traders, I used to ask them how long have they been successful and I carry on with understanding what/how they trade. I said “used to” because I don’t any more. I find it completely pointless to ask such questions because, more often than not, we trade different markets. Even if I met a currency trader, it is very difficult to exchange ideas on the system. Hence, I have moved on and, instead, I ask them “What makes a Good Trader Good?” in the hope to learn any new insights to what success really means.

With that, here are some of the qualities that I have learned from good traders.

1. Successfully Filters Noises

Noises are every where especially in most trading communities – you get it on forums, newsletters, online news portals, news channels, group discussions etc. Nonetheless, this is not an uncommon phenomenon and professional traders know it. Because good traders have tried and tested all the methods available (to them), they end up finding an effective way to filter any noises that might go their way.

Good traders know that they need to stand by your own conviction and make decisions based on what you belief (related article). Hence, they make every effort to filter as much noise as possible even if some of these noises are relevant to their trade. What good traders tend to do includes:

  • Trying to understand what the underlying information is before accepting it
  • Standing firm with their decision no matter how other sources view them
  • Making a decision to ignore the news or newsletters that they have read
  • Deciding to remain firmly in their zone (related article) when trading

The list goes on but I think you get the picture. There is no one-size-fits-all filtration method here but if you continue to search for the method that works for you, good traders know that it can save them in many occasions.

More importantly, the more noises they filter, the better their inner judgement becomes and that definitely influence their trading results.

2. Selective Development

Many traders think that good profitable traders stop learning as soon as they become consistently profitable. In my view, the contrary is true. Many good and profitable traders continue to learn. In fact, because they know what they are doing, these profitable traders continue to learn and they are very specific in their development.

By that, I mean that good traders would narrow down their search and only pick on new information that they know can help them become better. Unlike new traders who tend to learn everything on the planet, these veteran traders are cool and calm in their development. If they see something that might be useful, they take their time to read and explore the work of the author / educator before they decide if they want to integrate it into their own trading.

I truly believe this is one of the best ways to learn and this can be a good model for new traders to use. Because you are in a calm state-of-mind, the quality and amount of information that you can absorb is much more significant. You are filtering and only learning new information that are relevant, and that to me is a quality development.

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3. Protecting ones Trading Edge

protect your trading edgeIn NLP, we use a term call critical factor. This critical factor is a term used to describe your automated and unconscious defence mechanism.

For example, if I was to criticise you and you have strong reasons to disagree with me, you would likely step back and defend yourself. In this instance, your critical factor is up and what ever I say will not get through to your believe system. This is a natural way that your mind protects you and preserves your existing values and believes.

In a way, good traders have a similar mechanism to protect their trading edge. Good traders belief in their own trading and they trust it whole heartedly. In fact, it is because this belief that helps them remain consistently profitable. With that, they constantly keep their beliefs in tact. They find ways to ensure that those beliefs are never shaken even when they are challenged by the market.

Think about it, if you spent many years learning and developing your trading edge to a point where you are consistently profitable. Would you not protect it? You know you would, won’t you?

And from that point onwards, good traders protect their edge with everything they can. They would step back each time they are challenged and either ignore those challenges or ignore them as if it never happened.

4. Are Prepared to be Wrong

A good trader is prepared to be wrong (about their trades) no matter what he tells you yesterday, today or tomorrow. I don’t think this is a secret but all the professional traders that I’ve met makes every effort to prepare themselves to be wrong and these preparations can come in all shapes and sizes.

This is an interesting point to note because all these traders are very good at what they do – they are not a professional for nothing. They can explain their trades with confidence and conviction yet when you ask them how a specific trade might pan out, their conviction to the market direction switches. Just to be clear, this is not about being pessimistic or being overly cautions. This is a neither a switch from confidence to fear, nor is this a switch from a bias view to an aimless market.

Instead, these traders are able to whole heartedly accept that the market is random (related article) as they are aware that there is nothing that they can do to prepare themselves for it. In fact, they usually end their statement with a simple “Who knows?” or “Let’s see” phrase – subtle yet sufficient to bring their market views back to neutral.

5. Humility

winners trader

I have been very fortunate to have met with a few successful traders who have been very humble of their success. In fact, one or two very successful traders that I have met don’t discuss their careers – they claim to be IT experts or businessman. When I found out they were market traders as well, they remain modest about their success.

Of course, you can find really good ones who like the attention too but I have seen more humbled traders than the opposite.

Initially, I didn’t understand but as my curiosity continues to linger, I finally understood why they remain humble. After awhile, I began to appreciate the beauty of humility and I realise that there is no need to shout your success because not one can take it from you.

And when you go beyond that, you realise that just by the mere fact of being humble, you can easily acquire the 4 qualities mentioned above too – it is as if they are part of the same package.

Conclusion

Are you a good trader yet? Only you know the answer. However, if you aspire to become one, I would most definitely recommend that you should go around speaking to some of them. Go pick their brains and see if you can find some useful lessons where you can apply on yourself.

The discussions today seem like very trivial lessons, yet, it is these simple qualities that make a good trader good. If you are new to trading or in the process of becoming successful, then you can try and model these qualities in your own trading, knowing that you are heading in the right direction.

 

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